The IRS has the authority to impose penalties on companies that significantly underpay taxes as a result of inappropriate transfer pricing. Acme Company transfers a product to a foreign affiliate at $15 per unit, and the IRS determines the correct price should have been $65 per unit. The adjustment results in an increase in U.S. tax liability of $1,250,000. Due to this change in price, "what amount of penalty for underpayment of taxes as a result of an inappropriate transfer price will Acme Company pay?"
a. $0
b. $125,000
c. $250,000
d. $500,000